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Behaviorally efficient remedies: An experiment

Christoph Engel & Lars Freund

International Review of Law and Economics2026https://doi.org/10.1016/j.irle.2026.106321preprint
AJG 2ABDC B
Weight
0.50

Abstract

Under common law, the standard remedy for breach of contract is expectation damages. Under continental law, the standard is specific performance. The common law solution is ex post efficient. But is it also ex ante efficient? We use experimental methods to test whether knowing that non-fulfilment will only give a right to damages deters mutually beneficial trade. The design excludes aversion against others willfully breaking their promises, and fairness concerns. We find that there is indeed less trade if specific performance is not guaranteed, provided the preference for the traded commodity is sufficiently pronounced. • lab experiment isolates preference for specific performance • participants have substantial willingness to pay for avoiding damages regime • experiment excludes fairness concerns • “efficient breach of contract” is behaviorally inefficient • default remedy under common law at odds with majority preferences • need for contracting around exaggerates transaction cost

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https://doi.org/https://doi.org/10.1016/j.irle.2026.106321

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@article{christoph2026,
  title        = {{Behaviorally efficient remedies: An experiment}},
  author       = {Christoph Engel & Lars Freund},
  journal      = {International Review of Law and Economics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.irle.2026.106321},
}

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Behaviorally efficient remedies: An experiment

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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